Definitions of Poverty

IN THE UNITED STATES, the Census Bureau determines the poverty status of families based on poverty thresholds or income levels dependent on the number of family members. The poverty thresholds are adjusted each year to reflect changes in the Consumer Price Index (CPI). The primary basis for poverty threshold determination goes back to 1955 when a U.S. Department of Agriculture (USDA) survey indicated that approximately one-third of a family's income was spent on the purchase of food. The Social Security Administration then used the least expensive food plan identified by the USDA, the Economy Food Plan, and multiplied this number by three to come up with total family income.

The poverty thresholds represent income levels and will vary depending on the number of family members and their ages. If total family income is less than the threshold, all members of that family are determined to be in a poverty status. Conversely, if family income is above the threshold, the family is not in poverty. Certain categories of people are not considered in the determination of a family's poverty status. These include foster children, children under age 15 and not residing with the family, people in prisons or nursing homes, family members in college dormitories, and those serving in the military.

Annual poverty guidelines are published each February in the Federal Register and are the official measures to be used during that year. This measure of income, also defined as absolute poverty, identifies families who do not have the necessary resources to ensure a healthy lifestyle. The guidelines appear in a two-dimensional matrix format showing the number of family members and the associated income level.

For example, the 2005 poverty guidelines list a family income of $19,350 for a family of four residing in any of the 48 contiguous states and the District of Columbia. A family of four with an income above that amount would not be in poverty. Two additional columns in the matrix list the income levels for Alaska and Hawaii, both of which are higher. Alaska's income level for a family of four is $24,950 and Hawaii is listed at $22,260.

The guidelines are a simplified version of the poverty thresholds and are used primarily to determine a family's eligibility for certain federal programs. For instance, eligibility for inclusion in Head Start, the Food Stamp Program, the Low-income Home Energy Assistance Program, the National School Lunch Program, and the Children's Health Insurance Program would be [Page 240]determined on the basis of the poverty guidelines. An additional adjustment to the guidelines is required when immigrant visa cases are being determined. For example, the income level for a family of four residing within the 48 contiguous states is increased by 25 percent (from $19,350 to $24,188) in order to comply with immigration statutes.

Another way to consider poverty is in the context of a family's marginalization within the economic system and its level of deprivation. This approach suggests a more subjective measure and is identified as relative poverty. Poor people under this measure are judged to have less access to income than others in the society. For instance, instead of using the guidelines for a family of four (see above) to determine membership in a poverty cohort, a relative measure such as the percentage of the median income for all families of four could be used for comparison. In short, a relative poverty indicator is based on a judgmental conclusion and not on a specific income measure.

...